posted sharply lower second-quarter earnings Monday, as junk-bond losses ate into profits and corporate spending continued to slow.
American Express posted earnings of 13 cents a share, in line with the
Thompson Financial/First Call
analyst estimate and down 76% from the year-ago 56 cents. Excluding the charge, which the company
warned of last week, earnings fell about 5% from a year ago, to 53 cents.
In line with its announcement last week, the company took an $826 million pretax charge to write down the value of junk bonds, also known as high-yield securities, and to rebalance its investment portfolio at American Express Financial Advisors.
But even without the junk-bond losses, business was nothing to write home about. Excluding the charge, AEFA earnings dropped 22%, while revenue fell 11% from the year-ago level. At Travel Related Services, which accounts for roughly 70% of the company's net income, revenue rose 6%, a figure the company called "substantially slower than in recent periods,
reflecting the continued slowdown in corporate spending on travel and entertainment."
American Express Bank posted net income of $12 million, up from $7 million a year ago. Reflecting last week's warning of bad news, the stock was barely budging, lately trading up 2 cents to $38.